Wharton sent less than 17% of grads to Wall Street, rather than one in four in 2008

More graduates are opting for careers outside investment banking as the pull of big bonuses is replaced by job insecurity in an industry struggling to adapt to regulatory change.

MBA statistics show a steady decline in the number of graduates taking jobs at investment banks. The Wharton school at the University of Pennsylvania, which bankers consider the "conveyor belt of Wall Street", sent 16.6 per cent of its class to investment banks in 2011 compared with more than one in four in 2008. The pattern is similar at other large business schools.

"The number of students going into financial services has remained steady but what's changed has been the types of roles," said Maryellen Lamb, director of MBA career management at Wharton. "We've seen more opportunity for students in private equity and hedge fund roles."

Goldman Sachs' decision to end its two-year graduate training programme caused ripples on university campuses. The bank has decided to hire graduates on an open-ended basis partly due to worries that some were defecting to private equity firms after the two years were up.

"They're out there on a limb by themselves now," said one campus recruiter at a rival bank, whose company is considering following the practice. "It's going to be interesting to see whether it's positive or negative from a campus recruiting standpoint."

A senior executive at Morgan Stanley said his bank was committed to its training programme and added that the industry had a duty to train people and not be "feeders like the hedge funds".

In the UK, the financial services sector cut 9,000 jobs during the past three months as business volumes and profitability fell for the first time in more than three years, the CBI employers' group and PwC reported. A further 3,000 job cuts are expected.

Banking suffered the deepest job cuts after a slowdown in investment banking revenues and a scandal over the Libor benchmark interest rate.

City of London recruiter Morgan McKinley, which reinforced the uncertain employment outlook, said new vacancies in the UK's financial market fell 19 per cent last month compared with August and 43 per cent compared with a year ago.

For those who decide to stick with Wall Street, pay packages are down but not to penurious levels. Graduates who land a job at JPMorgan Chase, Goldman or Morgan Stanley can earn $60,000-$70,000 in their first year, with a potential bonus of one to two times that salary, according to recruiters. MBA graduates typically earn about $90,000-$100,000 in salary with a similar proportion of bonus on top.

There is also debate about the effect of broader anti-bank sentiment on students desire to choose a Wall Street career. John Studzinski, head of Blackrock Advisory Partners, who talks regularly to MBA students, said there had been a noticeable turn against a career in finance with more wanting to become entrepreneurs.

The campus recruiter at the rival bank said there was a noticeable spillover from the Occupy Wall Street events last year. "There was a lot of backlash and there were some protesters at some of the campus events," he said, adding that at his bank there seemed to be as many students as ever willing to work long hours for the privilege and pay of being an investment banker. "We didn't see a decrease in applicants."

At Harvard Business School, the proportion of MBA graduates this year moving into investment banking fell from 10 to 7 per cent. But it was not clear that they are all doing something more entrepreneurial. The proportion going into consulting, at 29 per cent, was a nine-year high.